CAN ANYONE GV ME ANSWER ABT "CONTRIBUTION TO PF BY EMPLOYER" WLL BE A ASSET FOR THE COMPANY OR LIABILITY...THAT MEANS WLL IT APPEAR ON DEBIT OR CREDIT SIDE OF TRIAL BALNCE............PLS GV ME ANSWER THS ONE WITH LOGIC..............?
5 Replies
Mahesh Paryani
(Chartered Accountant)
(365 Points)
Replied 10 July 2008
dear
employer is liable to diducted pf from employee salary and also an equalent amount he has to contribute towards it
so it becomes his liablity to pay pf to the government
accounting entries would be
p & L a/c dr to employers contribution towards PF (employer)
and diduction from employee accounting entry would be
Salary a/c dr {included in salary is the PF amount} to bank a/c to employee contribution towards PF a/c
I hope your query is solved
regards
CA CS Akashdeep Singh
(Practicing CA)
(1394 Points)
Replied 10 July 2008
pf deducted from employee salary is treated as income but at the time of payment it is treated as expense
Satyendra sahu
(service)
(216 Points)
Replied 10 July 2008
Hi all,
Coming to question asked, PF contribution by employer will never appear in balance sheet. It is an e xpenditure for the company.
Akashdeep , the suggestion you mentioned is not for accounting. It is as per income tax. Accounting and Income tax both are different from each other.
Rahul
(Assistant Article)
(19 Points)
Replied 11 July 2008
PF contribution is actually deducted from the employee's salary and as well as contributed by the employer upto a specified compulsory limit (at present 12% of salary). These funds are to be deposited in separate bank accounts with the approved authorities. these deposits should be made by the 10th of next month in the specified bank account.
now coming to the question weather its an asset or liability.
PF can never come as asset in B/S as they are in nature of expense, though if it is collected and not deposited in designated bank account before the closing of B/S the same would appear on Liability side of the B/S.
Generally PF is adjusted before the B/S date and hence appears in P&L A/c.
Ashish Mishra
(Chartered Accountant)
(42 Points)
Replied 12 July 2008
Contribution to PF by by employer is the liability of the employer. Entry should be
P/L A/c Dr
to Employers contribution to PF
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